http://www.nationalpost.com/news/world/story.html?id=1039765
Summary
Who ever said that crime doesn’t pay? Just recently on December 6th, four men went into the Harry Winston jewellery store in Paris and made off with $137 million in stolen merchandise. The men went into the jewellery store with concealed weapons and were also disguised. Paris police are saying that this was a very well organized and unfortunately, very successful mission as the four men easily walked in, and walked out with a bags full of “merchandise”. This is not the first time that the shop was robbed, as it suffered a loss of $16 million just over a year ago.
Connections
The connection to chapter 3 is found in the accounting cycle. Even though this was not a conventional transaction, it still has to be recorded as if it was. The jewellery is a permanent account and will be part of the accounting done during the accounting cycle. This means that the transaction will be posted, journalized, put in the ledger, and will be subject to all the steps after that. As a result, there will be a major decrease in shareholder equity, seeing as $137 million of merchandise is no longer part of the company, and nothing was given back to the company in order to complete, and balance out the equation.
Reflection
The accounting cycle is here for us to use as a tool to make sure that all transaction are on the record and can be referred back to at any time. This is a great way to make sure that accounting stays legitimate, especially for shareholders or potential buyers in a company. If the accounting cycle was altered or disregarded completely, then a company could do whatever it wants to make sure that it remains attractive in the eyes of and investor. Take the robbery for example, what stops the accountants from posting this entire ordeal as a legitimate transaction? If this were done, then people would look at this company thinking that they not only make expensive jewellery, but also their product is in demand since they just made a $137 million deal. Who would the real thieves be then?
C. Tut
FINAC12
Block A
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3 comments:
A very different concept aimed for your blog, extremely interesting and attention grabbing. Made me laugh (haha). The point is made just in an unorthodox way. Involving the robbery into the mix shows creativity and therefore draws more attention to
your blog. Now, back to the actual point of this, the connections made are appropriate, make sense, and surely apply to what is going on in the chapter. The accounting cycle is continuous as it incorporates a variety of actions such as journal entries. I also liked the fact that you mentioned several actions in the accounting cycle "as opposed to" only one. It gives me the sense that you are well aware of the topic on hand. I also strongly agree with one of your last notes in the "Personal Reflection" about how the entire robbery could have been written as a 'legitimate' transaction. It was a good point to make as it very possibly could done if there was proof of the ordeal ever happening. Overall, a good effort put into the sentence formations and the connections made are well done.
Jason K.
Block A
Cameron, you have some valid and interesting points in your blog. This robbery is definitely going to have to be treated as a transaction during the accounting cycle. When recorded, the robbery will result in a 137 million dollar decrease in shareholder equity. I agree with you that this is a good way to make sure that accounting stays legitimate. If this transaction is not recorded in a legitimate manner, potential investors and shareholders would be observing false financial statements which could hinder their decision to invest. Considering this company was robbed for 16 million dollars last year, I strongly feel that they need to upgrade their security measures. All in all, a good post with a great deal of information on the accounting cycle.
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